6 The EastAfrican NEWS MAY 24-30,2014 W TERROR AR on Kenya rolls out tax measures to save tourism from terrorism P≥esident announces incentives aimed at keeping c≥ucial secto≥ afloat amid c≥ippling insecu≥ity Foreign tourists wait to board a Thomson flight back to the UK at Moi International Airport, Mombasa, on May 16. Picture: File By SCOLA KAMAU Special Correspondent order to raise domestic travel and lift the tourism sector, which is under siege from rising insecurity and travel advisories, after international arrivals slumped by a third. Among the measures un- K veiled by President Uhuru Kenyatta on Friday was the revocation of a Treasury circular restricting civil servants from holding events in private hotels. This was ex- enya has announced a raft of tax incentives in pected to open up a lucrative income stream for hotels as the public service is among the biggest spenders in conference tourism. Hotel owners said the ear- lier directive had hurt their revenues, a situation that was made worse by the deteriorating state of insecurity. Travel advisories Last week, two global con- ferences in Mombasa and Nairobi were cancelled for security reasons. And over the past two weeks, at least four countries — the US, the UK, France and Australia — that are key tourist source markets for Kenya issued travel advisories for their nationals. “Last year, international arrivals dropped further due to security-related challenges,” said President Kenyatta. “With the recent advisories from some of our traditional source markets that account for about 46 per cent, tourism is likely to continue facing difficulties.” The UK accounts for 13.7 per cent of Kenya’s total arrivals, followed by the US. Since September last year, at least 100 people have been killed in terror attacks mainly in the capital Nairobi as well as in the north and also the coastal city of Mombasa. Tourism players are now calling for immediate negotiations with the countries to reverse the travel advisories. “The government has not showcased Kenya as a safe destination; it does not demonstrate any [safety] measures in the places cited as insecure, there seems to be a constrained relationship between our government and tourist sources,” said a key player in the tourism sector who declined to be named. To attract a huge domestic market, the president said, corporate and business entities will from June 12 be allowed to pay vacation trip expenses for their staff on annual leave in Kenya and deduct such expenditure from their taxes. This initiative is expected to see at least 25,000 Kenyans take a week’s holiday every month. From May 29, all air ticket- ing services supplied by travel agents will be VAT-exempt to enhance Kenya’s competitiveness in the region, he added. Downward spiral Kenyan tour operators have cited the VAT Act 2013, which became effective late last year, as an impediment to business. In October, they wrote to parliament seeking a reversal of the VAT provisions for the industry, saying the new taxes led to massive cancellations which had sent the country’s main foreign exchange earner into a downward spiral. “Cancellations alone up to the end of this year could cost Kenya Ksh5 billion ($54.7 million) in addition to the amount lost in lack of new bookings,” said Mike Macharia, the chief executive officer of the Kenya Association of Hotelkeeepers and Caterers. Latest data by the Kenya Tourist Board show that tourism receipts in 2013 declined SAVING TOURISM FRO COLLAPSE President Uhuru Kenyatta announced measures aimed at rescuing Kenya’s tourism: TREASURY CIRCULAR restricting the public service from holding conferences and other meetings in private hotels revoked. VACATION TRIP expenses for staff of corporate and business entities on annual leave in Kenya from June 12 to be deducted from taxes. AIR TICKETING services for the second year running, posting a 2.13 per cent drop to Ksh93.97 billion ($1.1 billion) from Ksh96.02 billion ($1.13 billion) in 2012. Last year, the number of international and domestic tourists fell 15.8 per cent to 1.5 million from 1.78 million in 2012. The second half of the year is considered a lucrative period for the industry, boosting the economy, but insecurity remains a big threat. At the beginning of this month, the Treasury said it had allocated Ksh200 million ($2.4 million) to tourism recovery programmes beginning this month in a bid to boost tourist numbers, but cancellations weigh down these efforts. Phyllis Kandie, the Cabi- net Secretary for EAC Affairs, Commerce and Tourism, however said her ministry had requested for more funds. “The funding is not enough to undo the damage to the image and the brand,” she told a media briefing in Nairobi on Friday. “We have written to the Treasury requesting for more funds.” President Kenyatta also directed the Kenya Revenue Last year, international arrivals dropped further due to security related challenges.” President Kenyatta supplied by travel agents will be exempted from VAT with effect from May 29. KRA TO PAY outstanding income tax refunds to the tourism industry by May 29. PARK FEES, currently $90 per non-resident and $15 per resident, reduced to $11 and $80 from June 12. LANDING CHARGES at Moi International Airport and Malindi Airport cut by 40 per cent and 10 per cent. Authority to pay out all outstanding income tax-related refunds, running into billions of shillings, owed to the tourism industry by May 29. This is expected to free up more cash for expansion. To encourage travel, espe- cially to national parks, and attract foreign tourists, park fees, currently at $90 per visit for non-residents and $15 per resident guest, were cut to $11 and $80 from June 12. But still, there are con- cerns. “Kenya is the most ex- pensive tourist destination among its EAC peers,” said Fred Kaigua, the chief executive officer of the Kenya Association of Tour Operators. “Operators are struggling because, either they shoulder the burden or revise the terms of their bookings.” To encourage both local and international flights into Moi International Airport and Malindi Airport — the two airports which serve Kenya’s key coastal tourist destinations — the government has reduced landing charges by 40 per cent and 10 per cent, respectively. Tourism industry players had cited the charges as a pullback and the new order, which took effect immediately, was expected to increase the number of flights at the two airports. To expand its basket, Ken- ya targets to attract at least a million tourists from China annually.